Independent Financial Services

Mortgage Protection

To ensure that you can repay a mortgage or loan on your death If the mortgage is a REPAYMENT (capital and interest) then mortgage protection, also known as decreasing term assurance, is likely to be appropriate.

This is designed to pay off the loan, and therefore the amount of cover decreases in line with the outstanding loan. It is difficult to arrange supplemental policies for new (larger) mortgages as the cover and term won’t match the new (single) loan. Most companies recommend that you start a new policy and cancel the old one relating to your old loan (in that order) – we can discuss this and offer the most suitable advice

If the mortgage is INTEREST ONLY (endowment style) then level term assurance is generally appropriate. The level of cover remains the same throughout the term because the loan remains the same. Level term assurance is more expensive than decreasing term assurance, because there is a greater level of cover later in the term of plan when you are most likely to die because you are older. A term assurance plan does not accrue a value. It will only pay out if you die (or suffer a critical illness if covered) during the term. Alternative arrangements must therefore be made to repay the loan.